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Headlines
- Thermal Energy International saw a 51% drop in stock over three months.
- The company displays a strong Return on Equity (ROE) of 17%.
- Earnings growth aligns with industry trends over five years.
Despite the recent decline of 51% in Thermal Energy International Inc.'s (CVE:TMG) stock over the past three months, the company's long-term financial outlook remains promising.
At the core of evaluating a company's financial health is its Return on Equity (ROE), a measure that indicates how effectively management is utilizing shareholders’ equity to generate profits. An impressive ROE often signals strong financial performance.
Understanding ROE
ROE is calculated as:
Return on Equity = Net Profit ÷ Shareholders' Equity
For Thermal Energy International, this equates to a 17% ROE, achieved with a net profit of CA$672k over shareholders’ equity of CA$3.9m. Thus, for every CA$1 of equity, the company produces a CA$0.17 profit.
ROE and Earnings Growth
Thermal Energy International boasts an ROE of 17%, significantly higher than the 8.4% industry average. Coupled with a notable net income growth of 34% over the past five years, this suggests the company is effectively reinvesting its profits.
Profit Reinvestment Strategy
Thermal Energy International reinvests all earnings back into the business rather than distributing dividends. This strategy appears to foster growth and will likely benefit the company’s stock if maintained.
